What we are living through is what markets call a Black Swan Event. How quickly markets rebound is anyone's guess but the longer this goes on the better for oil & Gas companies that are able to survive as it will decimate the US and most of the world's production capacity.
On the other hand, to say FAR has been backed into a corner is an understatement. WPL could get FAR for as little as 3c (includes 1.5c cash holding) if major holders were willing to sell at that price. Worse case for WPL is that they may have to up it to 4.25c to get the major holders onboard but in this market I think 3c would have a very high probability of success. Wpl would be sitting on FX profits in AUD terms that would well and truly eclipse any AUD $150M cash payment (3c takeover) to acquire FAR. Another words, WPL would get FAR for nothing except the forgoing of a potential FX profit. Wpl reported liquid assets of US $6.9B as at 31 December 2019. Assuming that these liquid assets are in USD denominations then the current 10% FX gain equates to AUD $690M profit.
Another potential problem for FAR if it is to continue as a going concern is that I think the likelihood of the Senegal Govt exercising their back in rights is looking less likely meaning FAR would be on the hook for the entire 15% or an extra US $66M which includes 10% contingencies.
FAR Price at posting:
1.0¢ Sentiment: Hold Disclosure: Held
